We publish three different market values in the Red Book.
- Average Retail Value is the highest value published and represents what the Red Book staff considers to be the replacement cost for a good clean vehicle of same make/year/model/mileage. This value is what a consumer would generally pay for a vehicle. One can always find higher prices or lower prices on a certain vehicle, however, this published price is considered an average of the many vehicles researched when Red Book condition criteria is applied.
- Average Wholesale Value is generally what a dealer would pay for a good clean vehicle at the dealer only auto auction. Trade-in is another term generally used for this valuation category.
- Average Finance Value is a mathematical computation of Average Wholesale Value. Finance Value is always 90% of Wholesale. This is always the lowest value in the book. Finance is a conservative number to be used when there is not a physical inspection of the vehicle or the credit worthiness of a customer is questionable. One can always dispose of a vehicle at that price level providing it is in good clean condition.
My personal experience has been that my credit union loans at 100% of Red Book retail. I hear from some lenders who use 90% of Red Book Retail. Others may use Finance when the customer does not have a history with the lender.
There is no hard and fast rule which number to use as it is completely up to the user and should be tempered with their lending experience.